DALLAS, July 21, 2016 /PRNewswire/ -- Alliance Data
Systems Corporation (NYSE: ADS), a leading global provider of
data-driven marketing and loyalty solutions, today announced
results for the quarter ended June 30,
2016.
SUMMARY
|
Quarter Ended June
30,
|
(in millions,
except per share amounts)
|
2016
|
2015
|
%
Change
|
Revenue
|
$ 1,749
|
$ 1,501
|
+17%
|
Net income
|
$
141
|
$
130
|
+8%
|
Net income
attributable to Alliance Data
stockholders
per diluted share ("EPS") (a)
|
$
1.24
|
$
2.11
|
-41%
|
Diluted shares
outstanding
|
59.0
|
62.3
|
-5%
|
*******************************
|
|
|
|
Supplemental Non-GAAP
Metrics (b):
|
|
|
|
Adjusted
EBITDA
|
$
472
|
$
432
|
+9%
|
Adjusted
EBITDA, net of funding costs and non-
controlling interest ("adjusted EBITDA, net") (a)
|
$
422
|
$
393
|
+7%
|
Core earnings
attributable to Alliance Data
stockholders per diluted share ("core EPS") (a)
|
$
3.68
|
$
3.32
|
+11%
|
(a)
|
2015 profitability
measures shown above are net of amounts attributable to the
minority interest in Netherlands-based BrandLoyalty, referred to as
'non-controlling interest'.
|
(b)
|
See "Financial
Measures" below for a discussion of non-GAAP financial
measures.
|
CONSOLIDATED RESULTS
Revenue increased 17 percent to $1.75
billion while adjusted EBITDA, net increased 7 percent to
$422 million for the second quarter
of 2016. Net income increased 8 percent to $141 million, while EPS decreased 41 percent to
$1.24 due to $1.14 in accretion charges related to the
purchase of the remaining 20 percent interest in BrandLoyalty. Core
EPS increased 11 percent to $3.68 for
the second quarter of 2016, compared to guidance of $3.58. Unfavorable foreign exchange rates reduced
both revenue and core EPS by less than 1 percent compared to the
second quarter of 2015.
Ed Heffernan, president and chief
executive officer of Alliance Data, commented, "We started the year
with below trend growth rates of 5 percent for revenue and core EPS
in the first quarter. At that time we guided to a modest
acceleration in growth rates to 8 percent for revenue and core EPS
in the second quarter, with the goal of returning to double-digit
growth in revenue and core EPS in the back-half of 2016.
"What we saw in the second quarter was an early acceleration
across the company as revenue and core EPS surged 17 percent and 11
percent, respectively. This strong performance makes our previous
full-year guidance of 10 percent and 11 percent growth in revenue
and core EPS, respectively, seem conservative. As such, we are
raising guidance on both."
Heffernan continued, "As I have previously indicated, we need
three things to happen for this year to really come together.
Encouragingly, each is trending in line with or better than
expectations. First, Epsilon performed better than anticipated as
revenue turned from down 2 percent in the first quarter to up 5
percent in the second quarter, compared to our expectations of a 2
to 3 percent turn. Adjusted EBITDA decreased 9 percent compared to
the second quarter of 2015, but improved substantially from the 22
percent decline in the first quarter with an expected flip to
positive growth in the third quarter as India comes fully online and redundant costs
are eliminated. Second, Card Services' gross yield, which was down
210 basis points in the first quarter, improved dramatically to
just 80 basis points down in the second quarter, roughly a quarter
ahead of expectations. Third, Card Services' principal loss rate
came in as expected at 5.1 percent in the second quarter, 10 basis
points better than the first quarter and on track for a 5.0 percent
loss rate for the year as per guidance set at the beginning of this
year.
"Finally, we have repurchased approximately 2.6 million shares
year-to-date, and used about half of our full-year authorization.
Additionally, we acquired the final 20 percent ownership of
BrandLoyalty during the quarter. M&A wasn't a priority for us
this year, but this was an opportunity too good to pass."
SEGMENT REVIEW
LoyaltyOne®: Revenue increased 17
percent to $352 million, while
adjusted EBITDA increased 20 percent to $79
million for the second quarter of 2016. On a constant
currency basis, revenue increased 19 percent, while adjusted EBITDA
increased 23 percent, compared to the second quarter of 2015.
AIR MILES® revenue increased 6 percent on a constant
currency basis driven by strong redemption growth. AIR MILES reward
miles issued decreased 3 percent compared to the second quarter of
2015 due to reduced promotional activity and the one-time issuance
of AIR MILES reward miles related to the conversion of Sobeys'
legacy program in the second quarter of 2015. AIR MILES reward
miles redeemed increased 8 percent compared to the second quarter
of 2015, due to double-digit growth in AM Cash, the instant reward
program option.
BrandLoyalty revenue increased 44 percent on a constant currency
basis. North American expansion efforts continue to develop with 5
programs scheduled in Canada and 2
programs in the U.S. for 2016. The initial program in the U.S. with
a top 3 grocer was very successful with the pilot stores showing
revenue growth approximately 1.5 percent higher than non-pilot
stores. Plans are underway to extend the program to the full store
network at a later date.
LoyaltyOne acquired the remaining 20 percent ownership of
BrandLoyalty effective April 1, 2016
for approximately $259 million in
consideration. Because the remaining ownership was purchased prior
to the 10 percent tranches scheduled for January 2017 and January
2018, the consideration paid exceeded the carrying value of
the redeemable non-controlling interest on the balance sheet. The
difference of $68 million is a charge
to retained earnings, but nonetheless is considered in the
calculation of EPS, which was reduced by $1.14.
Epsilon®: Revenue increased 5 percent
to $519 million, and adjusted EBITDA
decreased 9 percent to $103 million
for the second quarter of 2016. Adjusted EBITDA decreased
$10 million from the second quarter
of 2015, primarily due to approximately $6
million in duplicative payroll costs as the new India office ramps up, and approximately
$3 million in severance expense.
These costs are expected to abate in the third quarter.
Digital & technology platforms revenue increased a robust 14
percent to $387 million, largely
driven by a 66 percent increase in CRM. The backlog for CRM
continues to grow as 22 new clients have already been signed in
2016 with an annual contract value of approximately $50 million. Conversely, agency media &
services revenue dropped 15 percent from the prior year to
$132 million due to broad-based
weakness, especially in the telco, CPG and retail verticals. This
compares to a 23 percent decline in the first quarter.
The agency media & services offering has been weak for
several quarters due to a combination of decreased spending by a
large customer in traditional agency and lower volume of digital
media buys from large, third-party agencies. In response, three
initiatives were undertaken during the second quarter. The first
was to adjust the cost structure commensurate with lower revenue
expectations. That is largely complete. The second, which is a
longer-term initiative, is to redirect digital agency toward
mid-size agencies and direct-to-clients. The third is to pivot
digital agency towards data-driven marketing and insights, thus
creating a CRM 'light' solution for clients who are not yet ready
for full CRM.
Card Services: Revenue increased 25 percent to
$886 million and adjusted EBITDA, net
increased 10 percent to $276 million
for the second quarter of 2016.
Gross yields were 25.4 percent for the second quarter of 2016,
down approximately 80 basis points from the prior comparable
period. The decrease is primarily due to portfolio growth and
program changes.
Operating expenses increased 24 percent to $332 million, or 9.5 percent of average
receivables compared to 9.9 percent in the second quarter of 2015,
indicating strong operating leverage. The loan loss provision
increased 47 percent to $228 million,
driven by strong growth in average card receivables and higher
principal loss rates. Portfolio funding costs were $50 million for the second quarter of 2016, or
1.4 percent of average credit card receivables, up 10 basis points
from the second quarter of 2015.
Credit sales increased 18 percent to $7.1
billion for the second quarter of 2016, supported by a 5
percent increase in core cardholder spending as tender share gains
of approximately 180 basis points continued. Average credit card
receivables, excluding amounts reclassified as assets held for
sale, increased 24 percent to $13.5
billion compared to the second quarter of 2015, while net
principal loss rates for the second quarter of 2016 were 5.1
percent, up 60 basis points from last year. The increase is
primarily due to account seasoning and lower recoveries.
Guidance
Guidance for 2016 has been raised to $7.15 billion in revenue, an 11 percent increase,
and $16.85 in core EPS, a 12 percent
increase, both as compared to 2015.
Third quarter guidance is $1.78
billion in revenue and $4.42
in core EPS, both representing a 12 percent increase, as compared
to the third quarter of 2015.
Financial Measures
In addition to the results presented in accordance with
generally accepted accounting principles, or GAAP, the Company may
present financial measures that are non-GAAP measures, such as
constant currency financial measures, adjusted EBITDA, adjusted
EBITDA margin, adjusted EBITDA, net of funding costs and
non-controlling interest, core earnings and core earnings per
diluted share (core EPS). The Company believes that these non-GAAP
financial measures, viewed in addition to and not in lieu of the
Company's reported GAAP results, provide useful information to
investors regarding the Company's performance and overall results
of operations. Constant currency excludes the impact of
fluctuations in foreign exchange rates. The Company calculates
constant currency by converting our current period local currency
financial results using the prior period exchange rates. These
metrics are an integral part of the Company's internal reporting to
measure the performance of reportable segments and the overall
effectiveness of senior management. Reconciliations to comparable
GAAP financial measures are available in the accompanying schedules
and on the Company's website. The financial measures presented are
consistent with the Company's historical financial reporting
practices. Core earnings and core earnings per diluted share
represent performance measures and are not intended to represent
liquidity measures. The non-GAAP financial measures presented
herein may not be comparable to similarly titled measures presented
by other companies, and are not identical to corresponding measures
used in other various agreements or public filings.
Conference Call
Alliance Data will host a conference call on Thursday, July 21, 2016 at 8:30 a.m. (Eastern Time) to discuss the Company's
second-quarter 2016 results. The conference call will be available
via the Internet at www.alliancedata.com. There will be several
slides accompanying the webcast. Please go to the website at least
15 minutes prior to the call to register, download and install any
necessary software. The recorded webcast will also be available on
the Company's website.
If you are unable to participate in the conference call, a
replay will be available. To access the replay, please dial (855)
859-2056 or (404) 537-3406 and enter "39255550". The replay will be
available at approximately 11:45 a.m.
(Eastern Time) on Thursday, July 21,
2016.
About Alliance Data
Alliance Data® (NYSE: ADS) is a leading global
provider of data-driven marketing and loyalty solutions serving
large, consumer-based industries. The Company creates and deploys
customized solutions, enhancing the critical customer marketing
experience; the result is measurably changing consumer behavior
while driving business growth and profitability for some of today's
most recognizable brands. Alliance Data helps its clients create
and increase customer loyalty through solutions that engage
millions of customers each day across multiple touch points using
traditional, digital, mobile and emerging technologies. An S&P
500 and Fortune 500 company headquartered in Plano, Texas, Alliance Data consists of three
businesses that together employ more than 16,000 associates at
approximately 100 locations worldwide.
Alliance Data's Card Services business is a leading provider of
marketing-driven branded credit card programs. Epsilon®
is a leading provider of multichannel, data-driven technologies and
marketing services, and also includes Conversant®, a
leader in personalized digital marketing. LoyaltyOne®
owns and operates the AIR MILES® Reward Program,
Canada's premier coalition loyalty
program, and Netherlands-based
BrandLoyalty, a global provider of tailor-made loyalty programs for
grocers.
Follow Alliance Data on Twitter, Facebook, LinkedIn and
YouTube.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Forward-looking
statements give our expectations or forecasts of future events and
can generally be identified by the use of words such as "believe,"
"expect," "anticipate," "estimate," "intend," "project," "plan,"
"likely," "may," "should" or other words or phrases of similar
import. Similarly, statements that describe our business strategy,
outlook, objectives, plans, intentions or goals also are
forward-looking statements. Examples of forward-looking
statements include, but are not limited to, statements we make
regarding our expected operating results, future economic
conditions including currency exchange rates and the guidance we
give with respect to our anticipated financial
performance.
We believe that our expectations are based on reasonable
assumptions. Forward-looking statements, however, are subject to a
number of risks and uncertainties that could cause actual results
to differ materially from the projections, anticipated results or
other expectations expressed in this release, and no assurances can
be given that our expectations will prove to have been correct.
These risks and uncertainties include, but are not limited to,
factors set forth in the Risk Factors section in our Annual Report
on Form 10-K for the most recently ended fiscal year, which may be
updated in Item 1A of, or elsewhere in, our Quarterly Reports on
Form 10-Q filed for periods subsequent to such Form 10-K.
Our forward-looking statements speak only as of the date made,
and we undertake no obligation, other than as required by
applicable law, to update or revise any forward-looking statements,
whether as a result of new information, subsequent events,
anticipated or unanticipated circumstances or otherwise.
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(In millions, except
per share amounts)
|
(Unaudited)
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
Revenue
|
|
$
|
1,748.8
|
|
|
$
|
1,500.6
|
|
|
$
|
3,425.0
|
|
|
$
|
3,101.8
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
1,070.8
|
|
|
|
937.5
|
|
|
|
2,102.4
|
|
|
|
1,957.5
|
|
|
Provision for loan
loss
|
|
|
227.8
|
|
|
|
155.3
|
|
|
|
399.7
|
|
|
|
290.3
|
|
|
Depreciation and
amortization
|
|
|
129.6
|
|
|
|
122.1
|
|
|
|
258.0
|
|
|
|
243.7
|
|
|
Total operating
expenses
|
|
|
1,428.2
|
|
|
|
1,214.9
|
|
|
|
2,760.1
|
|
|
|
2,491.5
|
|
|
Operating
income
|
|
|
320.6
|
|
|
|
285.7
|
|
|
|
664.9
|
|
|
|
610.3
|
|
|
Interest expense,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitization funding
costs
|
|
|
30.0
|
|
|
|
24.6
|
|
|
|
60.4
|
|
|
|
48.4
|
|
|
Interest expense on
deposits
|
|
|
20.2
|
|
|
|
11.6
|
|
|
|
37.4
|
|
|
|
23.4
|
|
|
Interest expense on
long-term and other debt, net
|
|
|
53.5
|
|
|
|
44.5
|
|
|
|
104.7
|
|
|
|
87.0
|
|
|
Total interest
expense, net
|
|
|
103.7
|
|
|
|
80.7
|
|
|
|
202.5
|
|
|
|
158.8
|
|
|
Income before income
tax
|
|
$
|
216.9
|
|
|
$
|
205.0
|
|
|
$
|
462.4
|
|
|
$
|
451.5
|
|
|
Income tax
expense
|
|
|
76.2
|
|
|
|
75.0
|
|
|
|
162.8
|
|
|
|
156.6
|
|
|
Net income
|
|
$
|
140.7
|
|
|
$
|
130.0
|
|
|
$
|
299.6
|
|
|
$
|
294.9
|
|
|
Less: Net income
(loss) attributable to non-
controlling interest
|
|
|
—
|
|
|
|
(1.3)
|
|
|
|
1.8
|
|
|
|
1.0
|
|
|
Net income
attributable to common stockholders
|
|
$
|
140.7
|
|
|
$
|
131.3
|
|
|
$
|
297.8
|
|
|
$
|
293.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
|
140.7
|
|
|
$
|
131.3
|
|
|
$
|
297.8
|
|
|
$
|
293.9
|
|
|
Less: Accretion of
redeemable non-controlling
interest
|
|
|
67.6
|
|
|
|
—
|
|
|
|
83.5
|
|
|
|
15.2
|
|
|
Net income
attributable to common stockholders
after accretion of redeemable
non-controlling
interest
|
|
$
|
73.1
|
|
|
$
|
131.3
|
|
|
$
|
214.3
|
|
|
$
|
278.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – basic
|
|
|
58.8
|
|
|
|
61.9
|
|
|
|
59.3
|
|
|
|
62.5
|
|
|
Weighted average
shares outstanding – diluted
|
|
|
59.0
|
|
|
|
62.3
|
|
|
|
59.6
|
|
|
|
63.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic – Net income
attributable to common
stockholders
|
|
$
|
1.24
|
|
|
$
|
2.12
|
|
|
$
|
3.61
|
|
|
$
|
4.46
|
|
|
Diluted – Net income
attributable to common
stockholders
|
|
$
|
1.24
|
|
|
$
|
2.11
|
|
|
$
|
3.60
|
|
|
$
|
4.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
|
June
30,
2016
|
|
December 31,
2015
(1)
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,316.5
|
|
$
|
1,168.0
|
|
Credit card and loan
receivables:
|
|
|
|
|
|
|
|
Credit card and loan
receivables
|
|
|
13,985.2
|
|
|
13,799.5
|
|
Allowance for loan
loss
|
|
|
(782.6)
|
|
|
(741.6)
|
|
Credit card and loan
receivables, net
|
|
|
13,202.6
|
|
|
13,057.9
|
|
Credit card and loan
receivables held for sale
|
|
|
508.1
|
|
|
95.5
|
|
Redemption settlement
assets, restricted
|
|
|
473.2
|
|
|
456.6
|
|
Intangible assets,
net
|
|
|
1,128.8
|
|
|
1,203.7
|
|
Goodwill
|
|
|
3,835.1
|
|
|
3,814.1
|
|
Other
assets
|
|
|
2,306.9
|
|
|
2,554.1
|
|
Total
assets
|
|
$
|
22,771.2
|
|
$
|
22,349.9
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
$
|
853.9
|
|
$
|
844.9
|
|
Deposits
|
|
|
6,865.8
|
|
|
5,605.9
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
6,000.2
|
|
|
6,482.7
|
|
Long-term and other
debt
|
|
|
5,715.7
|
|
|
5,017.4
|
|
Other
liabilities
|
|
|
1,605.9
|
|
|
2,221.6
|
|
Total
liabilities
|
|
|
21,041.5
|
|
|
20,172.5
|
|
Redeemable
non-controlling interest
|
|
|
—
|
|
|
167.4
|
|
Stockholders'
equity
|
|
|
1,729.7
|
|
|
2,010.0
|
|
Total liabilities and
equity
|
|
$
|
22,771.2
|
|
$
|
22,349.9
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted to reflect
the adoption of Accounting Standards Update ("ASU") 2015-03,
"Simplifying the Presentation of Debt Issuance Costs."
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
|
Six Months
Ended
June
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
Cash Flows from
Operating Activities:
|
|
Net income
|
|
$
|
299.6
|
|
|
$
|
294.9
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
258.0
|
|
|
|
243.7
|
|
Deferred income
taxes
|
|
|
(14.0)
|
|
|
|
(42.9)
|
|
Provision for loan
loss
|
|
|
399.7
|
|
|
|
290.3
|
|
Non-cash stock
compensation
|
|
|
41.4
|
|
|
|
51.5
|
|
Change in operating
assets and liabilities
|
|
|
(352.1)
|
|
|
|
(233.4)
|
|
Originations of loan
receivables held for sale
|
|
|
(3,386.5)
|
|
|
|
(2,888.6)
|
|
Sales of loan
receivables held for sale
|
|
|
3,393.9
|
|
|
|
2,856.9
|
|
Other
|
|
|
91.1
|
|
|
|
(8.6)
|
|
Net cash provided by
operating activities
|
|
|
731.1
|
|
|
|
563.8
|
|
|
|
Cash Flows from
Investing Activities:
|
|
Change in redemption
settlement assets
|
|
|
18.4
|
|
|
|
(8.6)
|
|
Change in credit card
and loan receivables
|
|
|
(352.6)
|
|
|
|
(272.1)
|
|
Purchase of credit
card portfolios
|
|
|
(749.1)
|
|
|
|
—
|
|
Sale of credit card
portfolios
|
|
|
5.9
|
|
|
|
26.9
|
|
Capital
expenditures
|
|
|
(107.6)
|
|
|
|
(88.1)
|
|
Other
|
|
|
16.2
|
|
|
|
2.6
|
|
Net cash used in
investing activities
|
|
|
(1,168.8)
|
|
|
|
(339.3)
|
|
|
|
Cash Flows from
Financing Activities:
|
|
Borrowings under debt
agreements
|
|
|
2,449.9
|
|
|
|
1,751.1
|
|
Repayments of
borrowings
|
|
|
(1,766.2)
|
|
|
|
(1,102.3)
|
|
Issuances of
deposits
|
|
|
2,431.8
|
|
|
|
1,010.2
|
|
Repayments of
deposits
|
|
|
(1,168.3)
|
|
|
|
(1,205.4)
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
1,205.0
|
|
|
|
1,620.0
|
|
Repayments/maturities
of non-recourse borrowings of consolidated securitization
entities
|
|
|
(1,690.0)
|
|
|
|
(1,588.8)
|
|
Payment of
acquisition-related contingent consideration
|
|
|
—
|
|
|
|
(205.9)
|
|
Acquisition of
non-controlling interest
|
|
|
(360.7)
|
|
|
|
(87.4)
|
|
Purchase of treasury
shares
|
|
|
(522.6)
|
|
|
|
(676.7)
|
|
Other
|
|
|
1.4
|
|
|
|
22.1
|
|
Net cash provided by
(used in) financing activities
|
|
|
580.3
|
|
|
|
(463.1)
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
5.9
|
|
|
|
(16.3)
|
|
Change in cash and
cash equivalents
|
|
|
148.5
|
|
|
|
(254.9)
|
|
Cash and cash
equivalents at beginning of period
|
|
|
1,168.0
|
|
|
|
1,077.2
|
|
Cash and cash
equivalents at end of period
|
|
$
|
1,316.5
|
|
|
$
|
822.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
SUMMARY FINANCIAL
HIGHLIGHTS
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
Six Months
Ended
June 30,
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
Segment
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
352.3
|
|
|
$
|
301.7
|
|
|
17
|
%
|
|
$
|
706.9
|
|
$
|
689.6
|
|
3
|
%
|
|
Epsilon
|
|
|
518.8
|
|
|
|
495.2
|
|
|
5
|
|
|
|
1,012.1
|
|
|
1,000.1
|
|
1
|
|
|
Card
Services
|
|
|
885.8
|
|
|
|
710.4
|
|
|
25
|
|
|
|
1,721.3
|
|
|
1,425.1
|
|
21
|
|
|
Corporate/Other
|
|
|
0.1
|
|
|
|
—
|
|
|
nm
|
*
|
|
|
0.2
|
|
|
0.1
|
|
nm
|
*
|
|
Intersegment
Eliminations
|
|
|
(8.2)
|
|
|
|
(6.7)
|
|
|
nm
|
*
|
|
|
(15.5)
|
|
|
(13.1)
|
|
nm
|
*
|
|
Total
|
|
$
|
1,748.8
|
|
|
$
|
1,500.6
|
|
|
17
|
%
|
|
$
|
3,425.0
|
|
$
|
3,101.8
|
|
10
|
%
|
|
Segment Adjusted
EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
79.3
|
|
|
$
|
63.1
|
|
|
26
|
%
|
|
$
|
153.0
|
|
$
|
132.7
|
|
15
|
%
|
|
Epsilon
|
|
|
102.6
|
|
|
|
112.6
|
|
|
(9)
|
|
|
|
183.4
|
|
|
216.2
|
|
(15)
|
|
|
Card
Services
|
|
|
276.4
|
|
|
|
251.4
|
|
|
10
|
|
|
|
583.9
|
|
|
533.2
|
|
10
|
|
|
Corporate/Other
|
|
|
(36.8)
|
|
|
|
(34.6)
|
|
|
6
|
|
|
|
(59.3)
|
|
|
(59.3)
|
|
—
|
|
|
Total
|
|
$
|
421.5
|
|
|
$
|
392.5
|
|
|
7
|
%
|
|
$
|
861.0
|
|
$
|
822.8
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Indicators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit card statements
generated
|
|
|
69.7
|
|
|
|
59.2
|
|
|
18
|
%
|
|
|
135.3
|
|
|
117.9
|
|
15
|
%
|
|
Credit
sales
|
|
$
|
7,098.8
|
|
|
$
|
6,008.6
|
|
|
18
|
%
|
|
$
|
13,277.0
|
|
$
|
10,968.5
|
|
21
|
%
|
|
Average
receivables
|
|
$
|
13,505.3
|
|
|
$
|
10,866.2
|
|
|
24
|
%
|
|
$
|
13,521.0
|
|
$
|
10,771.8
|
|
26
|
%
|
|
AIR MILES reward miles
issued
|
|
|
1,432.5
|
|
|
|
1,482.2
|
|
|
(3)
|
%
|
|
|
2,718.7
|
|
|
2,711.1
|
|
—
|
%
|
|
AIR MILES reward miles
redeemed
|
|
|
1,232.2
|
|
|
|
1,142.1
|
|
|
8
|
%
|
|
|
2,516.1
|
|
|
2,354.8
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* nm-not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
RECONCILIATION OF
NON-GAAP INFORMATION
|
(In millions, except
per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
Adjusted EBITDA
and Adjusted EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
140.7
|
|
|
$
|
130.0
|
|
|
$
|
299.6
|
|
|
$
|
294.9
|
|
|
Income tax
expense
|
|
|
76.2
|
|
|
|
75.0
|
|
|
|
162.8
|
|
|
|
156.6
|
|
|
Total interest
expense, net
|
|
|
103.7
|
|
|
|
80.7
|
|
|
|
202.5
|
|
|
|
158.8
|
|
|
Depreciation and other
amortization
|
|
|
41.1
|
|
|
|
34.9
|
|
|
|
80.9
|
|
|
|
68.5
|
|
|
Amortization of
purchased intangibles
|
|
|
88.5
|
|
|
|
87.2
|
|
|
|
177.1
|
|
|
|
175.2
|
|
|
Stock compensation
expense
|
|
|
21.5
|
|
|
|
24.1
|
|
|
|
41.4
|
|
|
|
51.5
|
|
|
Adjusted
EBITDA
|
|
$
|
471.7
|
|
|
$
|
431.9
|
|
|
$
|
964.3
|
|
|
$
|
905.5
|
|
|
Less: Funding costs
(1)
|
|
|
50.2
|
|
|
|
36.2
|
|
|
|
97.8
|
|
|
|
71.8
|
|
|
Less: Adjusted EBITDA
attributable to non-
controlling interest
|
|
|
—
|
|
|
|
3.2
|
|
|
|
5.5
|
|
|
|
10.9
|
|
|
Adjusted EBITDA, net
of funding costs and non-
controlling interest
|
|
$
|
421.5
|
|
|
$
|
392.5
|
|
|
$
|
861.0
|
|
|
$
|
822.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
140.7
|
|
|
$
|
130.0
|
|
|
$
|
299.6
|
|
|
$
|
294.9
|
|
|
Add back: non-cash/
non-operating items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
|
|
21.5
|
|
|
|
24.1
|
|
|
|
41.4
|
|
|
|
51.5
|
|
|
Amortization of
purchased intangibles
|
|
|
88.5
|
|
|
|
87.2
|
|
|
|
177.1
|
|
|
|
175.2
|
|
|
Non-cash interest
expense (2)
|
|
|
6.3
|
|
|
|
5.9
|
|
|
|
12.7
|
|
|
|
11.8
|
|
|
Income tax effect
(3)
|
|
|
(39.6)
|
|
|
|
(38.5)
|
|
|
|
(78.5)
|
|
|
|
(86.7)
|
|
|
Core
earnings
|
|
|
217.4
|
|
|
|
208.7
|
|
|
|
452.3
|
|
|
|
446.7
|
|
|
Less: Core earnings
attributable to non-
controlling interest
|
|
|
—
|
|
|
|
1.8
|
|
|
|
4.0
|
|
|
|
7.5
|
|
|
Core earnings
attributable to common stockholders
|
|
$
|
217.4
|
|
|
$
|
206.9
|
|
|
$
|
448.3
|
|
|
$
|
439.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – diluted
|
|
|
59.0
|
|
|
|
62.3
|
|
|
|
59.6
|
|
|
|
63.0
|
|
|
Core earnings
attributable to common stockholders
per share - diluted
|
|
$
|
3.68
|
|
|
$
|
3.32
|
|
|
$
|
7.52
|
|
|
$
|
6.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents interest
expense on deposits and securitization funding costs.
|
(2)
|
Represents
amortization of debt issuance costs and mark-to-market gains on
interest rate derivatives.
|
(3)
|
Represents the tax
effect for the related non-GAAP measure adjustments using the
expected effective tax rate for each respective period.
|
|
|
Three Months Ended
June 30, 2016
|
|
|
LoyaltyOne
|
|
|
Epsilon
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
Operating income
(loss)
|
|
$
|
54.2
|
|
|
$
|
10.8
|
|
|
$
|
300.7
|
|
|
$
|
(45.1)
|
|
|
$
|
320.6
|
Depreciation and
amortization
|
|
|
22.5
|
|
|
|
82.4
|
|
|
|
22.4
|
|
|
|
2.3
|
|
|
|
129.6
|
Stock compensation
expense
|
|
|
2.6
|
|
|
|
9.4
|
|
|
|
3.5
|
|
|
|
6.0
|
|
|
|
21.5
|
Adjusted
EBITDA
|
|
|
79.3
|
|
|
|
102.6
|
|
|
|
326.6
|
|
|
|
(36.8)
|
|
|
|
471.7
|
Less: Funding
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
50.2
|
|
|
|
—
|
|
|
|
50.2
|
Less: Adjusted EBITDA
attributable to
non‑controlling interest
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
Adjusted EBITDA,
net
|
|
$
|
79.3
|
|
|
$
|
102.6
|
|
|
$
|
276.4
|
|
|
$
|
(36.8)
|
|
|
$
|
421.5
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2015
|
|
|
LoyaltyOne
|
|
|
Epsilon
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
Operating income
(loss)
|
|
$
|
42.9
|
|
|
$
|
19.8
|
|
|
$
|
266.2
|
|
|
$
|
(43.2)
|
|
|
$
|
285.7
|
Depreciation and
amortization
|
|
|
20.5
|
|
|
|
81.7
|
|
|
|
17.6
|
|
|
|
2.3
|
|
|
|
122.1
|
Stock compensation
expense
|
|
|
2.9
|
|
|
|
11.1
|
|
|
|
3.8
|
|
|
|
6.3
|
|
|
|
24.1
|
Adjusted
EBITDA
|
|
|
66.3
|
|
|
|
112.6
|
|
|
|
287.6
|
|
|
|
(34.6)
|
|
|
|
431.9
|
Less: Funding
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
36.2
|
|
|
|
—
|
|
|
|
36.2
|
Less: Adjusted EBITDA
attributable to
non‑controlling
interest
|
|
|
3.2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
3.2
|
Adjusted EBITDA,
net
|
|
$
|
63.1
|
|
|
$
|
112.6
|
|
|
$
|
251.4
|
|
|
$
|
(34.6)
|
|
|
$
|
392.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2016
|
|
|
LoyaltyOne
|
|
|
Epsilon
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
Operating income
(loss)
|
|
$
|
109.9
|
|
|
$
|
(1.7)
|
|
|
$
|
632.1
|
|
|
$
|
(75.4)
|
|
|
$
|
664.9
|
Depreciation and
amortization
|
|
|
43.4
|
|
|
|
167.1
|
|
|
|
42.4
|
|
|
|
5.1
|
|
|
|
258.0
|
Stock compensation
expense
|
|
|
5.2
|
|
|
|
18.0
|
|
|
|
7.2
|
|
|
|
11.0
|
|
|
|
41.4
|
Adjusted
EBITDA
|
|
|
158.5
|
|
|
|
183.4
|
|
|
|
681.7
|
|
|
|
(59.3)
|
|
|
|
964.3
|
Less: Funding
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
97.8
|
|
|
|
—
|
|
|
|
97.8
|
Less: Adjusted EBITDA
attributable to
non‑controlling interest
|
|
|
5.5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5.5
|
Adjusted EBITDA,
net
|
|
$
|
153.0
|
|
|
$
|
183.4
|
|
|
$
|
583.9
|
|
|
$
|
(59.3)
|
|
|
$
|
861.0
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2015
|
|
|
LoyaltyOne
|
|
|
Epsilon
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
Operating income
(loss)
|
|
$
|
97.4
|
|
|
$
|
26.8
|
|
|
$
|
561.4
|
|
|
$
|
(75.3)
|
|
|
$
|
610.3
|
Depreciation and
amortization
|
|
|
40.5
|
|
|
|
162.8
|
|
|
|
36.0
|
|
|
|
4.4
|
|
|
|
243.7
|
Stock compensation
expense
|
|
|
5.7
|
|
|
|
26.6
|
|
|
|
7.6
|
|
|
|
11.6
|
|
|
|
51.5
|
Adjusted
EBITDA
|
|
|
143.6
|
|
|
|
216.2
|
|
|
|
605.0
|
|
|
|
(59.3)
|
|
|
|
905.5
|
Less: Funding
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
71.8
|
|
|
|
—
|
|
|
|
71.8
|
Less: Adjusted EBITDA
attributable to
non‑controlling interest
|
|
|
10.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10.9
|
Adjusted EBITDA,
net
|
|
$
|
132.7
|
|
|
$
|
216.2
|
|
|
$
|
533.2
|
|
|
$
|
(59.3)
|
|
|
$
|
822.8
|
Contacts:
|
Investors/Analysts
|
|
Tiffany
Louder
|
|
Alliance
Data
|
|
214-494-3048
|
|
Tiffany.Louder@alliancedata.com
|
|
|
|
Media
|
|
Shelley
Whiddon
|
|
Alliance
Data
|
|
214-494-3811
|
|
Shelley.Whiddon@alliancedata.com
|
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SOURCE Alliance Data Systems Corporation